States are not in favour of increasing GST rates at a time when there is a consumption slowdown and it is not the right time to bring down the number of slabs under the Goods and Services Tax (GST), Sushil Kumar Modi, Deputy Chief Minister of Bihar and Convenor of Group of Ministers on IGST, said on Saturday.
There is no possibility of any change in the Goods and Services Tax (GST) rates till the revenue stabilises, Modi said while speaking on the theme ‘India: Roadmap to a $5 trillion economy’ at Ficci’s 92nd Annual Convention here.
“I want to assure you that not a single state… (and) the union government is ready to raise the tax rates,” he said.
“At a time when the economy is in a slowdown, if you cannot cut the tax rate to boost consumption, do not increase the rates too. At these times you cut the duties and tax rates, and not increase them,” Modi said.
On the chances of any reduction in GST rates, he said, “Till the time GST revenue does not stabilise, we cannot think of decreasing the tax rates. In fact, there is no possibility of any change in slabs and tax rates, hike or cut, in the near future.” There have been a shortfall in GST revenue collections against the projections. It crossed the Rs 1-trillion mark after a gap of three months in November with the revenue growing by six per cent to Rs 1.03 trillion during the month.
The collection was Rs 95,380 crore in October.
Modi also informed that now onwards the GST Council has decided to consider any change in tax rates only once in a year and rather than doing so in each and every meeting.
The latest meeting of the GST Council took place earlier this week, where the government fixed a uniform tax rate of 28 per cent on both state and private lotteries, which is to come to effect from March 2020.
In the previous various meetings of the GST Council, the government cut the rates on various services and goods, amidst GST collections remaining below expectations, with an aim to boost demand.
He also said that the time is not right to bring down the number of slabs under GST from the current five (0, 5, 12, 18 and 28 per cents) to 3 slabs.
Modi, who was the Finance Minister of Bihar when value-added tax (VAT) was administered in the country, said he is closely watching the execution of GST and enriching the process with learnings from eight different countries.
Compared to the pre-GST period, 99 per cent of the goods and services have less taxes levied on them post-GST, he said.
Fake invoicing has become a major issue and the government is looking for ways to check the menace, Modi said.
Source: Business Standard